Bankers seek slew of tax incentives in Budget 2013

NEW DELHI: Bankers today demanded tax sops like increasing the TDS limit on fixed deposit to Rs 25,000, incentives for investment in infrastructure bonds and a reduction in the lock-in period for tax saving deposits to three years.

In their pre-budget consultations with Finance MinisterP Chidambaram, bankers also sought permission to issue tax-free bonds like other financial institutions for raising funds and augmenting business.

Representatives from 22 banks and financial institutions pitched for increasing the TDS limit on fixed deposit to Rs 25,000. At present, tax is deducted at source on interest earned from fixed deposits of Rs 10,000 and above.

They also sought tax exemption of Rs 20,000 under Section 80CCF for investing in infrastructure tax free bonds and suggested inclusion of housing sector in the infrastructure segment.

After the meeting with the Finance Minister, SBI Chairman Pratip Chaudhuri said: "There was a requirement that this lock-in period on tax savings deposits be reduced from five years to three years to bring it in line with tax saving ELSS (equity linked saving schemes)".

While seeking transparency in gold and real estate transactions at par with equity transaction, bankers suggested that any restriction on gold import should be done carefully and in a calibrated manner.

"Gold import has also a co-relation with jewellery export. So if we try to bring down gold import, it could also affect jewellery export," Chaudhuri told reporters

Chidambaram in his opening remarks said: "Without vibrant and viable financial market architecture, there cannot be any sustainable economic growth. Efficient intermediation by financial markets lead to higher economic growth by increasing savings and their optimal allocation for productive uses".